Amid allegations of co-operative banks being used as conduits for money laundering, NABARD, which jointly regulates such lenders, has said that it has found no shortcoming pointing towards any such activity.

"Every year we do an inspection and we have not found anything like that," National Bank for Agriculture and Rural Development's (NABARD) chairman Prakash Bakshi said over the weekend, when asked about the recent controversy over money laundering.

A probe launched by Reserve Bank of India following allegations of non-compliance with anti-money laundering measures and know your customer (KYC) norms by top private banks has reportedly found that cooperative banks are used as conduits.

Not having the entire bouquet of service offerings, the cooperative banks tie-up with scheduled commercial banks to expand their reach. Co-operative banks can accept cash under Rs 50,000 from customers (the limit at which reporting to tax authorities sets in). They usually earn commission from larger banks for providing services.

When asked about the misuse of the system and if this amounts to regulatory arbitrage, Bakshi said, "It is the same regulation for everybody. Banking Regulation Act is same for everybody."

Online portal Cobrapost had in March made public a sting operation purportedly showing some executives at three top private banks -- ICICI Bank, HDFC Bank and Axis Bank – allegedly agreeing to receive unverified sums of cash and put

them in their investment schemes and benami accounts in violation of anti-money laundering laws.

Earlier this month, it had followed up with a similar operation, showing executives at over 20 financial institutions, including State Bank of India and Life Insurance Corporation of India, offering similar services.

The Reserve Bank has maintained that no transaction has happened while the sting also does not point to "money laundering".

RBI Governor D Subbarao has also said: "RBI is not directly involved... even banks are not directly responsible. They are not expected to inquire about the source of income. It is for government and tax authorities to check money laundering."

Bakshi said Nabard, which disbursed a refinance of Rs 65,000 crore on short-term agri loans last fiscal, is targetting to take the same number up to Rs 80,000 crore in

the current fiscal.

Meanwhile, in a first, NABARD, in association with the National Payments Corporation of India, launched the maiden Kisan Credit Card (KCC) Debit Card for the customers of the Raigad District Cooperative Bank in the district headquarters